ORLANDO, Fla., Aug. 2, 2016 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and six months ended June 30, 2016.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, Core FFO and AFFO available to common stockholders and diluted per share amounts:

 


Quarter Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015


(in thousands, except per share data)

Revenues

$

130,926



$

117,208



$

257,907



$

233,394










Net earnings available to common stockholders

$

43,084



$

37,330



$

104,908



$

82,450


Net earnings per common share

$

0.30



$

0.28



$

0.73



$

0.62










FFO available to common stockholders

$

80,503



$

73,090



$

160,601



$

143,933


FFO per common share

$

0.56



$

0.55



$

1.13



$

1.08










Core FFO available to common stockholders

$

84,404



$

73,518



$

164,722



$

144,517


Core FFO per common share

$

0.59



$

0.55



$

1.15



$

1.09










AFFO available to common stockholders

$

86,531



$

75,181



$

168,280



$

147,304


AFFO per common share

$

0.60



$

0.56



$

1.18



$

1.11


 

Second Quarter 2016 Highlights:

  • FFO per share increased 1.8% over prior year results
  • Core FFO per share increased 7.3% over prior year results
  • AFFO per share increased 7.1% over prior year results
  • Portfolio occupancy was 99.1% at June 30, 2016 consistent with March 31, 2016 and December 31, 2015
  • Invested $343.6 million in property investments, including the acquisition of 165 properties with an aggregate 1,095,000 square feet of gross leasable area at an initial cash yield of 6.9%
  • Sold seven properties for $19.7 million producing $1.2 million of gains on sales
  • Raised $128.3 million net proceeds from the issuance of 2,763,555 common shares

First Half 2016 Highlights:

  • FFO per share increased 4.6% over prior year results
  • Core FFO per share increased 5.5% over prior year results
  • AFFO per share increased 6.3% over prior year results
  • Invested $468.7 million in 211 properties with an aggregate 1,686,000 square feet of gross leasable area at an initial cash yield of 6.9%
  • Sold 17 properties for $72.5 million producing $18.1 million of gains on sales
  • Raised $216.3 million in net proceeds from the issuance of 4,762,965 common shares

Craig Macnab, Chief Executive Officer, commented: "2016 is off to a terrific start with better than expected acquisitions. Our balance sheet remains very strong and our portfolio occupancy continues to be exceptional. Also, we are pleased to have recently announced a 4.6% increase in our third quarter dividend which will make 2016 our 27th consecutive year of increased annual dividends per share."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of June 30, 2016, the company owned 2,452 properties in 48 states with a gross leasable area of approximately 26.3 million square feet and with a weighted average remaining lease term of 11.4 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 2, 2016, at 10:30 a.m. ET to review these results.  The call can be accessed on the National Retail Properties web site live at http://www.nnnreit.com.  For those unable to listen to the live broadcast, a replay will be available on the company's web site.  In addition, a summary of any earnings guidance given on the call will be posted to the company's web site.

Statements in this press release that are not strictly historical are "forward-looking" statements.  These statements generally are characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results.  These risks include, among others, general economic conditions, local real estate conditions, changes in interest rates, increases in operating costs, the preferences and financial condition of the company's tenants, the availability of capital, risks related to the company's status as a REIT and the profitability of the company's taxable subsidiary.  Additional information concerning these and other factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the company's Securities and Exchange Commission ("SEC") filings, including, but not limited to, the company's Annual Report on Form 10-K.  Copies of each filing may be obtained from the company or the SEC.  Such forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates.  Actual operating results may differ materially from what is expressed or forecast in this press release.  National Retail Properties, Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

The reported results are preliminary and not final and there can be no assurance that the results will not vary from the final information filed on Form 10-Q with the SEC for the quarter and six months ended June 30, 2016.  In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. 

Funds From Operations, commonly referred to as FFO, is a relative non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP.  FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") and is used by the company as follows:  net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses), any applicable taxes and noncontrolling interests on the disposition of certain assets, the company's share of these items from the company's unconsolidated partnerships and any impairment charges on a depreciable real estate asset.

FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies.  FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions.  Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure.  The company's computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs.  A reconciliation of net earnings (computed in accordance with GAAP) to FFO, as defined by NAREIT, is included in the financial information accompanying this release.

Core Funds From Operations ("Core FFO") is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the company believes are infrequent and unusual in nature and/or not related to its core real estate operations.  Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the company's operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the company's operating performance on an ongoing basis.  Core FFO is used by management in evaluating the performance of the company's core business operations and is a factor in determining management compensation.  Items included in calculating FFO that may be excluded in calculating Core FFO may include items like transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, preferred stock redemption costs or other non-core amounts as they occur.   The company's computation of Core FFO may differ from the methodology for calculating Core FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to Core FFO is included in the financial information accompanying this release.

Adjusted Funds From Operations ("AFFO") is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP.  AFFO should not be considered an alternative to net earnings, as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the company's performance.  The company's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs.  A reconciliation of net earnings (computed in accordance with GAAP) to AFFO is included in the financial information accompanying this release.

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)




Quarter Ended


Six Months Ended



June 30,


June 30,



2016


2015


2016


2015

Income Statement Summary


















Revenues:









Rental and earned income


$

126,929



$

113,224



$

249,404



$

225,288


Real estate expense reimbursement from tenants


3,248



3,324



6,838



6,838


Interest and other income from real estate transactions


301



213



764



376


Interest income on commercial mortgage residual interests


448



447



901



892




130,926



117,208



257,907



233,394











Operating expenses:









General and administrative


8,735



7,830



17,984



16,435


Real estate


4,567



4,658



9,355



9,417


Depreciation and amortization


36,489



34,202



71,144



66,343


Impairment – commercial mortgage residual interests valuation


632



428



852



428


Impairment losses – real estate and other charges, net of recoveries


5,459



2,686



6,031



3,714




55,882



49,804



105,366



96,337











Other expenses (revenues):









Interest and other income


(72)



(35)



(91)



(47)


Interest expense


24,081



21,678



47,667



43,464


Real estate acquisition costs


280



96



409



695




24,289



21,739



47,985



44,112











Income tax benefit




495





54











Earnings before gain on disposition of real estate, net of income tax
   expense


50,755



46,160



104,556



92,999











Gain on disposition of real estate, net of income tax expense


1,178



30



18,053



7,230











Earnings including noncontrolling interests


51,933



46,190



122,609



100,229











Loss (earnings) attributable to noncontrolling interests


9



(2)



16



(62)











Net earnings attributable to NNN


51,942



46,188



122,625



100,167


Series D preferred stock dividends


(4,762)



(4,762)



(9,523)



(9,523)


Series E preferred stock dividends


(4,096)



(4,096)



(8,194)



(8,194)


Net earnings available to common stockholders


$

43,084



$

37,330



$

104,908



$

82,450







































































































Quarter Ended


Six Months Ended



June 30,


June 30,



2016


2015


2016


2015










Weighted average common shares outstanding:









Basic


143,443



133,267



142,142



132,471


Diluted


143,977



133,601



142,694



132,825











Net earnings per share available to common stockholders:









Basic


$

0.30



$

0.28



$

0.74



$

0.62


Diluted


$

0.30



$

0.28



$

0.73



$

0.62




















 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)




Quarter Ended


Six Months Ended



June 30,


June 30,



2016


2015


2016


2015

Funds From Operations (FFO) Reconciliation:









Net earnings available to common stockholders


$

43,084



$

37,330



$

104,908



$

82,450


Real estate depreciation and amortization


36,407



34,086



70,984



66,113


Gain on disposition of real estate, net of income tax and
   noncontrolling interest


(1,178)



(30)



(18,053)



(7,178)


Impairment losses – depreciable real estate, net of recoveries and
   income tax


2,190



1,704



2,762



2,548


Total FFO adjustments


37,419



35,760



55,693



61,483


FFO available to common stockholders


$

80,503



$

73,090



$

160,601



$

143,933











FFO per common share:









Basic


$

0.56



$

0.55



$

1.13



$

1.09


Diluted


$

0.56



$

0.55



$

1.13



$

1.08











Core Funds from Operations Reconciliation:









Net earnings available to common stockholders


$

43,084



$

37,330



$

104,908



$

82,450


Total FFO adjustments


37,419



35,760



55,693



61,483


FFO available to common stockholders


80,503



73,090



160,601



143,933











Impairment  – commercial mortgage residual interests valuation


632



428



852



428


Impairment losses – non-depreciable real estate and other charges


3,269





3,269



156


Total Core FFO adjustments


3,901



428



4,121



584


Core FFO available to common stockholders


$

84,404



$

73,518



$

164,722



$

144,517











Core FFO per common share:









Basic


$

0.59



$

0.55



$

1.16



$

1.09


Diluted


$

0.59



$

0.55



$

1.15



$

1.09











 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)













Quarter Ended


Six Months Ended



June 30,


June 30,



2016


2015


2016


2015

Adjusted Funds From Operations (AFFO) Reconciliation:









Net earnings available to common stockholders


$

43,084



$

37,330



$

104,908



$

82,450


Total FFO adjustments


37,419



35,760



55,693



61,483


Total Core FFO adjustments


3,901



428



4,121



584


Core FFO available to common stockholders


84,404



73,518



164,722



144,517











Straight line accrued rent


84



187



(157)



(18)


Net capital lease rent adjustment


353



342



692



676


Below market rent amortization


(661)



(676)



(1,520)



(1,700)


Stock based compensation expense


2,667



2,368



5,370



4,777


Capitalized interest expense


(316)



(558)



(827)



(948)


Total AFFO adjustments


2,127



1,663



3,558



2,787


AFFO available to common stockholders


$

86,531



$

75,181



$

168,280



$

147,304











AFFO per common share:









Basic


$

0.60



$

0.56



$

1.18



$

1.11


Diluted


$

0.60



$

0.56



$

1.18



$

1.11











Other Information:









Percentage rent


$

164



$

112



$

638



$

297


Amortization of debt costs


$

757



$

714



$

1,513



$

1,423


Scheduled debt principal amortization (excluding maturities)


$

133



$

410



$

392



$

819


Non-real estate depreciation expense


$

84



$

122



$

165



$

240











2016 Earnings Guidance:








FFO guidance for 2016 is $2.31 to $2.36 per share before any impairment expense. The 2016 AFFO is estimated to be $2.36 to $2.41 per share. The FFO guidance equates to net earnings before any impairments or gains or losses from the sale of real estate of $1.30 to $1.35 per share, plus $1.01 per share of expected real estate depreciation and amortization. The guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.



2016 Guidance

  Net earnings per common share before any impairment charges or
    gains (losses) on sale of real estate


$1.30 - $1.35 per share

  Real estate depreciation and amortization per share


$1.01 per share

FFO per share (Core)


$2.31 - $2.36 per share

  AFFO per share


$2.36 - $2.41 per share

  G&A expenses


$35.5 - $36.0 Million

  Real estate expenses, net of tenant reimbursements


$5.5 Million

  Acquisition volume


$650 - $750 Million

  Disposition volume


$85 - $100 Million

 

 

National Retail Properties, Inc.

(in thousands)

(unaudited)




June 30,
2016


December 31,
2015

Balance Sheet Summary










Assets:





Cash and cash equivalents


$

2,371



$

13,659


Restricted cash and cash held in escrow


242



601


Receivables, net of allowance


2,205



3,344


Mortgages, notes and accrued interest receivable, net of
   allowance


5,271



8,688


Real estate portfolio:





Accounted for using the operating method, net of accumulated
   depreciation and amortization


5,630,117



5,253,511


Accounted for using the direct financing method


13,826



14,518


Real estate held for sale


3,062



35,429


Commercial mortgage residual interests


10,580



11,115


Accrued rental income, net of allowance


25,221



25,529


Debt costs, net of accumulated amortization


3,396



4,003


Other assets


88,999



89,647


Total assets


$

5,785,290



$

5,460,044







Liabilities:





Line of credit payable


$

147,300



$


Mortgages payable, including unamortized premium and net of
   unamortized debt costs



16,900




23,964


Notes payable, net of unamortized discount and unamortized
   debt costs



1,953,479




1,951,980


Accrued interest payable


19,138



20,113


Other liabilities


100,977



121,594


Total liabilities


2,237,794



2,117,651







Stockholders' equity of NNN


3,547,253



3,342,134


Noncontrolling interests


243



259


Total equity


3,547,496



3,342,393







Total liabilities and equity


$

5,785,290



$

5,460,044







Common shares outstanding


146,002



141,008







Gross leasable area, Property Portfolio (square feet)


26,326



24,964


 

 

National Retail Properties, Inc.

Debt Summary

As of June 30, 2016

(in thousands)

(unaudited)



Unsecured Debt


Principal


Principal,
Net of
Unamortized
Discount


Stated Rate


Effective
Rate


Maturity Date

Line of credit payable


$

147,300


$

147,300


L + 92.5 bps


1.385

%


January 2019












Unsecured notes payable:











2017


250,000


249,851


6.875

%


6.924

%


October 2017

2021


300,000


297,551


5.500

%


5.689

%


July 2021

2022


325,000


321,682


3.800

%


3.985

%


October 2022

2023


350,000


348,146


3.300

%


3.388

%


April 2023

2024


350,000


349,420


3.900

%


3.924

%


June 2024

2025


400,000


399,090


4.000

%


4.029

%


November 2025

Total


1,975,000


1,965,740


















Total unsecured debt (1)


$

1,975,000


$

1,965,740


















Debt costs




(17,782)







Accumulated amortization


5,521







Debt costs, net of accumulated amortization


(12,261)







Notes payable, net of unamortized discount and
unamortized debt costs


$

1,953,479








(1) Unsecured notes payable have a weighted average interest rate of 4.5% and a weighted maturity of 6.5 years




Mortgages Payable


Principal
Balance


Interest Rate


Maturity Date

Mortgage(1)


$

14,274


5.230

%


July 2023

Mortgage(1)


2,744


6.400

%


February 2017



$

17,018

(2)











Debt costs


(226)





Accumulated amortization


108





Debt costs, net of accumulated amortization


(118)





Mortgages payable, including unamortized
premium and net of unamortized debt costs


$

16,900





(1) Includes unamortized premium







(2) Mortgages payable have a weighted average interest rate of 5.4% and a weighted average maturity of 6.0 years

 

 

National Retail Properties, Inc.

Property Portfolio


Top 20 Lines of Trade





As of June 30,


Line of Trade


2016(1)


2015(2)

1.

Convenience stores


16.7

%


17.5

%

2.

Restaurants – full service


12.6

%


8.9

%

3.

Restaurants – limited service


7.7

%


7.1

%

4.

Automotive service


6.7

%


7.1

%

5.

Family entertainment centers


5.7

%


5.6

%

6.

Theaters


5.1

%


5.1

%

7.

Health and fitness


4.2

%


3.8

%

8.

Automotive parts


4.0

%


4.5

%

9.

Recreational vehicle dealers, parts and accessories


3.4

%


3.6

%

10.

Banks


3.3

%


3.6

%

11.

Sporting goods


2.8

%


3.4

%

12.

Wholesale clubs


2.5

%


2.8

%

13.

Medical service providers


2.2

%


2.0

%

14.

Drug stores


2.2

%


2.4

%

15.

Consumer electronics


2.1

%


2.3

%

16.

Travel plazas


2.0

%


2.2

%

17.

Home improvement


1.9

%


1.9

%

18.

General merchandise


1.8

%


2.1

%

19.

Home furnishings


1.8

%


2.0

%

20.

Grocery


1.6

%


1.6

%


Other


9.7

%


10.5

%


Total


100.0

%


100.0

%

 

Top 10 States



State


% of Total(1)



State


% of Total(1)

1.

Texas


18.9

%


6.

Indiana


4.3

%

2.

Florida


9.3

%


7.

Georgia


4.3

%

3.

Ohio


5.8

%


8.

Virginia


3.6

%

4.

Illinois


5.1

%


9.

Alabama


3.1

%

5.

North Carolina


4.9

%


10.

Tennessee


2.9

%



(1)

Based on the annualized base rent for all leases in place as of June 30, 2016.

(2)

Based on the annualized base rent for all leases in place as of June 30, 2015.

 

 

National Retail Properties, Inc.

Property Portfolio


Top Tenants (> 2.0%)





Properties


% of Total (1)


Sunoco


125


5.6

%


Mister Car Wash


90


4.1

%


LA Fitness


26


3.6

%


Couche-Tard (Pantry)


86


3.4

%


Camping World


32


3.4

%


7-Eleven


77


3.3

%


SunTrust


121


3.1

%


AMC Theatre


17


2.9

%


Bell American (Taco Bell)


115


2.9

%


Chuck E. Cheese's


53


2.6

%


BJ's Wholesale Club


8


2.5

%


Frisch's Restaurant


74


2.3

%


Gander Mountain


12


2.2

%


Bob Evans


117


2.1

%


Best Buy


19


2.0

%

 

Lease Expirations(2)




% of
Total(1)


# of
Properties


Gross Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross Leasable
Area (3)

2016


0.3

%


9


130,000


2022


5.5

%


99


1,182,000

2017


2.3

%


44


852,000


2023


2.3

%


56


930,000

2018


5.9

%


183


1,645,000


2024


2.7

%


50


885,000

2019


3.2

%


79


1,116,000


2025


5.3

%


133


1,118,000

2020


4.0

%


136


1,549,000


2026


5.9

%


167


1,738,000

2021


4.6

%


120


1,343,000


Thereafter


58.0

%


1,348


13,419,000





(1)

Based on the annual base rent of $517,010,000, which is the annualized base rent for all leases in place as of June 30, 2016.


(2)

As of June 30, 2016, the weighted average remaining lease term is 11.4 years.


(3)

Square feet.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/second-quarter-2016-operating-results-announced-by-national-retail-properties-inc-300307209.html

SOURCE National Retail Properties, Inc.

Copyright 2016 PR Newswire

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